﻿Economic Model﻿“What are our priorities? First, the welfare, the survival of the people. Then, democratic norms and processes which from time to time we have to suspend.” - Former Prime Minister Lee Kuan Yew, 1986 National Day Rally No wonder, Singapore has a small domestic market. Ignoring such a strong limitation, its economy heavily engages in the global marketplace. It also has one of the topmost open economies in the world. Do you know how hard it is to be one of the topmost open economies and maintain such a status? It has achieved several key economic goals such as - (a) consistently positive surplus (b) no foreign debt and (c) high government revenue. Wait a minute! No foreign debt? Even the US economy will immediately and totally collapse today if she has to pay even half of her foreign debts. Singapore has a small area and has no natural resources. But it was surprising to note that during the 1997 financial crisis, its economy was growing in full swing. The economies of neighboring countries were sliding at the same time. The same trend was seen during the 2008 global crisis. While the developed economies of US and Europe were struggling to avoid long term recession, Singapore was growing at a stunning rate. The key or driving forces of Singapore are - (a) the world's largest seaport (b) electronics manufacturing and machinery exports (c) tourism and (d) financial services. We will focus on these issues later in this article.﻿GDP﻿

In 2012, Singapore had a GDP of 274.7 billion USD (Gross Domestic Product). Let us compare it with two other Asian countries – Nepal and Bhutan. In 2012, Nepal had $1,400 per capita GDP and Bhutan had $6,800 per capita GDP whereas Singapore had $62,100 per capita GDP. Is not it surprisingly high? Singaporean economy has rapidly been growing and as a result the country has one of the highest GDP per capita in the world. Nearly 5% GDP is usual in Singapore. About 50 years ago, GDP per capita was less than 320 USD. But today it has risen to an incredible 60,000 USD. This GDP is the sixth highest in the world.﻿Export and Import Trade ﻿

The list of main export items is pretty long – machinery and equipment, petroleum products, food & beverage, textile and garments, electronics, telecommunication apparatus, consumer goods, chemicals, pharmaceuticals transport equipment, and mineral fuels. Only handful countries could be able to export so many items as “major items”. The main export partners are the United States, China, Japan, Malaysia, Indonesia and Hong Kong. Read the list of import items carefully and you will see that its export items silently hint that it has an advanced economy. The main import items are machinery and equipment, aircrafts, crude oil, petroleum products, electronic components, motor vehicles, consumer goods, chemicals, food and beverage, iron and steel, textile yarns and fabrics, and mineral fuels. The main import partners are the United States, China, Japan, Malaysia, Indonesia and South Korea.﻿Government Revenue, Revenue Sources and Surplus﻿

When the Singaporean government earned $55.18 billion as revenue in 2012, several countries were compromising with their sovereignty for $1 or $2 as foreign aid and letting their people to be bombed by the invaders. So, $55.18 billion is not a small amount I guess. You will soon see that many local and foreign corporate companies are making money in Singapore. So, it was nothing surprising that corporate income tax was $12.94 billion and it was continuously the main contributor to the Government's revenue. Tax revenue accounts for around 90% of government revenue. Tax revenue sources include - (a) customs duties (b) property, income and excise duties (c) GST etc. Non-tax revenue sources are - (a) sale of land and other capital goods (b) rental of residential, business, local and overseas assets (c) charges and fees collected from permits and licenses (d) fines and forfeitures. The overall budget surplus was $3.86 billion. Did you notice I mentioned “budget surplus” which was a dream of most of the countries?Public Debt

You already know the government has no foreign debt but maintains consistent budget surpluses. Its debt system is a bit different than other nations. Singaporean government debt is issued for investment purposes, and not for fiscal needs. Public debt consists largely of Singapore Government Securities (SGS) issued to assist the Central Provident Fund (CPF) which administers Singapore's defined contribution pension fund. Did you remember Central Provident Fund (CPF) is only for healthcare and pension but not for any risky adventure? Currency Strength

Singapore’s currency (SGD) is overvalued on a global scale. The currency has two risky factors - low investment flow potential and high purchase price parity potential. Fortunately, the country is regularly attracting new investments. It is also true that no currency has absolute growth consistency and stability.

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